ENERGY PRICES WERE MIXED ON THURSDAY… natural gas corrected and the liquids exploded. Oil prices surged yesterday, ostensibly, if media accounts are to be believed (they’re not) on news that sales of existing homes in the U.S. increased for a third straight month. We will be honest… we had no idea it required so much crude oil to resell a home in the U.S.
Whoa… you learn something new every day in this market.
As we noted in last Friday’s issue of The Schork Report, in light of last season’s restart of the Independence Hub, we expect the year-on-year surplus to narrow through August. However, recall that last summer’s injection rate was book-ended by the unscheduled shut-in to the Independence Hub in the beginning of the season and the shut-ins at the end of the season related to hurricanes Gustav and Ike. As such, barring another repeat of last year’s storm activity in the Gulf, we can expect the surplus to blow out once again as we head into the winter.
The Gulf Coast is currently afloat on a cushion of gas, 1,043 Bcf. For instance, supplies are now 6% or 60 Bcf above the end-of-season (mid November) 5-year interpolated norm and within 3% of the all-time high, 1,073 Bcf. Injections need only average 16% of the 5-year average between now and November to hit this high.
Thus, all together now… you can’t swing a cat without hitting a Btu of gas in the Gulf.
We are now five weeks past the summer solstice. This is the point of the year when we normally see the hottest temperatures and therefore the greatest demand for gas-fired cooling Btus.
But for most key market areas, this is not a normal summer.